Shoppers save with reward apps, but where’s the data going?
When it comes to saving on groceries or trips to the mall, Nicole Schaubrock is a pro.
She scours the flyers and websites warning him @couponcutiecanada The Instagram account’s 254,000 followers for supermarket sales and deals like Lululemon or Amazon.
But one of its tried-and-true savings methods, Checkout51, Caddle, Drop, Eclipsa, apps that offer gift cards, points and cash in exchange for uploading receipts, tracking purchases or completing surveys, creates a mystery for the savvy shopper. .
“The purpose of these apps is basically to collect data, from what I understand, but I don’t know for sure,” said Schaubrock, who lives in Dominion City, Man. About 100 km south of Winnipeg. “I don’t know about that side of it.”
Schaubroeck is right about apps collecting data, but where does the information go and who actually benefits from it?
Many apps make money from contracts with retailers and brands that want to drive purchases, reward loyal customers and learn more about how specific demographics shop. Receipts submitted by customers, linked credit cards and completed surveys help apps fulfill their customer requirements.
The information the apps deal with can be incredibly valuable to Canadian brands, says Ransom Hawley, who started the Cashback app seven years ago after working at SE Johnson, maker of Ziploc and Windex.
“It was really hard for me to get good data and insights that were Canadian and recent,” he recalls.
“Imagine if you presented insights to Walmart and the data was from the US six months ago, they would just be laughed out of the room.”
A chance meeting with Apple co-founder Steve Wozniak convinced him to build Cuddle, a St. Catharines, Ont. the company checks for uploaded receipts, inquiries and reviews.
Daily surveys cost users five cents each. An uploaded receipt from stores like No Frills, Dollarama, Home Depot and Sephora can make them anywhere from 10 cents to a dollar.
Receipts help Caddle know which customers have purchased the products featured in the app so that it can confirm that it has been purchased.
Other brands want Caddle to receive their product reviews. The receipt identifies when someone has purchased a targeted product, so Caddle can offer them money for writing a review.
Caddle makes its money from surveys that help customers make inferences about shopping habits and opinions.
While Hawley has heard of “bad actors” mishandling data, he said Cuddle is upfront about its policies from the moment users sign up.
“There’s a clear disclaimer in there that says, ‘hey, this is how we’re going to use your data,’ and it’s not buried somewhere and it’s not legalized,” Hawley said.
“It’s a misconception,” he added, that companies like his collect data and pass it on to customers with people’s names and other identifying details.
“With the things we sign with, like Walmarts and Nestles, they don’t want personally identifiable information because that makes them liable,” he said.
“So the vast majority of the data we sell is just aggregated and anonymized.”
In effect, anonymized data is de-identified through a technical process, so even if found, it cannot be linked to an individual, said Imran Ahmad, head of technology at law firm Norton Rose Fulbright Canada.
However, some people confuse the term with undisclosed data; data that removes names but often leaves details such as address or date of birth, allowing room for identification.
Regardless of which apps they use, it’s their responsibility to handle the data securely and figure out in advance how the information will be used, which Ahmad says most apps do.
Bob Fay, managing director of the digital economy at the Center for International Management Innovation, has reviewed several money-saving apps but has refused to sign up for any because the information they collect is “too invasive.”
“It’s very unclear how that information is being used, the only thing I think is clear is that they are monetizing that information,” he said.
“The old adage that there’s no such thing as a free lunch, or free money with these apps, is true.”
He worries that people “don’t fully understand what they’re giving away with these apps,” but a recent survey by Drop, which offers points in exchange for access to customers’ credit card purchases and survey responses, suggests that’s not the case. concern for many.
The Toronto-based company found that 70 percent of members it recently surveyed were not concerned about their data being sold, and 23 percent were “somewhat concerned.” Only the last two percent were concerned.
“They don’t mind it, they’re very aware of the fact that their data is being used, and they’re happy to opt into it because the value they’re getting on the other side outweighs what’s going on there.” said Amber Foucault, Drop’s Chief Product Officer.
Drop’s user base is primarily Generation Z and millennials, and the app, which touts “bank-level security,” promises it doesn’t share user data with third parties.
“Only anonymized complete information can be presented to third parties,” Drop writes on its website.
His clients are often companies looking for shopping insights or to help target new customers or “battlefield customers” who consistently shop with their competitors.
“If a user hasn’t shopped at a beauty brand before, we can give them an opportunity to shop there and encourage them to maybe switch to their current beauty brand,” Foucault said.
“Or if that shopper is really loyal, we can give the beauty brand an opportunity to reward or incentivize them a little bit more because of that ongoing store.”
Using these methods, it has rewarded more than five million users with more than $48 million, including many that flocked to the app in recent months as the 20-year inflation took hold.
But Ahmad still has a warning.
“People need to know when they give something, maybe they get something, but just because you get something doesn’t mean you shouldn’t give,” he said.
“With anything that’s free, there’s guaranteed to be some component that’s good enough for it, so I think people should go (into it) with their eyes wide open.
This report by The Canadian Press was first published on March 12, 2023.
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